Mind and Body

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The train to legalize recreational marijuana is picking up speed

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Recreational cannabis legalization is moving ahead in Rhode Island.

By Ian Knowles
Posted 3/29/21
Odds are that Rhode Island will soon legalize marijuana [cannabis] for recreational use, following the path of Massachusetts, representing a sea change in drug policy. Ian Knowles provides a look back at the history – and a look forward at the economic and policy ramifications.
What are the demographics in other states that have legalized recreational use of marijuana? What are the current uses of CBD products – including stress, anxiety and migraines? How will the workplace requirements around marijuana use need to change? Will businesses be able to deduct marijuana expenses, similar to drinks at a business meal? How many reporters in Rhode Island currently use recreational marijuana purchased in Massachusetts? What kind of advertising regulations will be in place regarding marijuana stores? Will Rhode Island assisted living facilities plan excursions to retail marijuana stores, similar to what is currently done in California? Has there been an increase in emergency room visits in Rhode Island for acute marijuana intoxication?
Sen. Steve Daines, a Republican from Montana, during his recent visit to the Mexican border, complained that homegrown “meth” in his state was being replaced with impure imports from Mexico, in a scene so bizarre and absurd that it could have been an outtake from “Breaking Bad.” Homegrown meth? To quote WPRO’s Steve Klamkin, “Really?”
Equally absurd, Massachusetts Gov. Charlie Baker has contracted with McKinsey & Co. to study the future of work in Massachusetts, at the same time the consultant is paying millions to Massachusetts in a legal settlement for its role in helping Purdue Pharma “turbocharge” opioid sales to increase profits. “The [Baker] Administration should not be enriching the company that profited form the devastation of our communities,” argued Mass. Attorney General Maura Healey. “After what they did to families here, why would we reward them w/more state contracts? The Administration has paid them $17M since July. It’s outrageous,” Healey tweeted on Thursday, March 25. Will the R.I. General Assembly ever conduct an investigation into how much private consulting firms such as McKinsey, Deloitte, Boston Consulting Group, and Alvarez & Marshal?
At a time when the U.S. is being ravaged by a public health crisis in gun violence and mass shootings, the failure to enact common-sense gun control measures is a human stain on our elected officials. Just as the pendulum has swung toward legalization of recreational marijuana, the time is now for regulation of assault weapons.

PROVIDENCE – The recreational marijuana legalization train is speeding down the tracks in Rhode Island. Gov. Dan McKee has now taken over for former Gov. Gina Raimondo in the conductor’s seat. The R.I. Senate leadership is on board, but they are pushing their own legalization plan forward – a 68-page Cannabis Authorization, Regulation and Taxation Act, 2021-S 0568. [For the record, marijuana is now often called cannabis, a more politically correct term.]

“Cannabis legalization is a monumental shift in public policy that effectively creates a new economy,” said Sen. Josh Miller, chair of the R.I. Senate Committee on Health and Human Services, in announcing the Senate plan on March 9, which differs from the McKee plan. “We want to ensure as many Rhode Islanders as possible have the opportunity to participate in this new economy.”

Fifteen states [and the District of Columbia] now allow recreational marijuana use. Thirty-three states [and D.C.] have legalized medical marijuana. New York State is on the verge of a deal to legalize recreational use. Rhode Island is playing catch up.

A 2020 national Gallup Poll reported 68 percent of Americans are now in favor of legalizing cannabis, a marked swing higher from the 50 percent who were in favor of legalization in a 2011 poll.

Indeed, the once contentious, divisive debate between advocates of legalization and critics recommending continued prohibition appears to be ending. If you are placing bets, the odds are that marijuana will soon join alcohol and nicotine as legal recreational drugs, heralding in the new normal in Rhode Island.

The question is no longer if, but when legalization will occur in the Ocean State. And, how soon federal legalization may follow.

Watching the river flow – and change course
In our telescoped news universe, it is sometimes hard to measure or gauge how quickly public opinion has shifted. In 1996, California was the first state to allow medical marijuana [Rhode Island did so in 2006]. In 1973, Oregon was the first state to decriminalize marijuana [Rhode Island did so in 2013]. And in 2012, Washington and Colorado were the first states to legalize marijuana. In neighboring Massachusetts, the legal sale [and taxation] of products in recreational marijuana stores, which began on Nov. 20, 2018, has emerged as a blossoming enterprise.

The questions to ask are: What happened? What caused this sea change? What arguments swayed policy makers? And, how compelling is the economic rationale behind the change in policy?

Historical context
Let’s take a quick look back at the historical arguments – and their waning influence on the present momentum.

• The critics: The basis for the initial prohibitionist argument was firmly established in 1930 by Harry J. Anslinger, the first Commissioner of the Federal Bureau of Narcotics [a precursor to the Drug Enforcement Administration]. He proclaimed that “Marijuana is the most violence-causing drug in the history of mankind,” and that “Marijuana is an addictive drug which produces in its users insanity, criminality, and death.”

Anslinger also claimed: “There are 100,000 total marijuana smokers in the U.S., and most are Negroes, Hispanics, Filipinos and entertainers. Their satanic music, jazz and swing, result from marijuana usage. This marijuana causes white women to seek sexual relations with Negroes, entertainers and any others.”

If there is any remaining skepticism about the racial underpinnings for the War on Drugs, well, there you go.

For decades, the near-hysterical tone of misinformation and moral indignation continued to be reflected at the highest levels of government.

• In 1970, President Richard Nixon signed the Controlled Substances Act that classified marijuana under Schedule I, the classification for the most dangerous class of drugs with the highest potential for abuse and little to no medical value [including heroin].

• John Ehrlichman, counsel to President Nixon and assistant to the president for domestic affairs [and convicted for Watergate offenses], wrote in 1982 about the perverse rationale behind the designation: “We knew we couldn’t make it illegal to be against the war [Vietnam] , but by getting the public to associate the hippies with marijuana and the Blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course, we did.”

•  In 1980, then presidential candidate Ronald Reagan said: “Leading medical researchers are coming to the conclusion that marijuana is probably the most dangerous drug in the United States.”

•  And, in 2017, Alabama Sen. Jeff Sessions [who became Trump’s first Attorney General], proclaimed: “Good people don’t smoke marijuana.”

On the other side, the arguments around legalization of marijuana and other drugs, there were equally hyperbolic statements.

• The advocates: One spiritual leader of the abolitionists was Timothy Leary. In 1967, at the Human Be-In, a gathering of some 30,000 attendees in San Francisco, Leary urged America to “Turn on, tune in, drop out,” arguing the benefits of LSD and marijuana use.

• The early advocacy arguments included assertions that marijuana was a naturally occurring plant so therefore harmless; that legalization would essentially end drug-related violence [e.g., the influence of the cartels]; that marijuana was America’s largest cash crop and so would prove to be a fiscal panacea for states; that it is a medicine [ironically, a notion vehemently opposed by the National Organization for the Reform of Marijuana Laws director in 2012]; and even that it would improve one’s sex drive.

Indeed, marijuana use was often celebrated in popular culture – in movies and in song, too plentiful to name all.

Legalize it, don't criticize it/Legalize it, and I will advertise it,” was the lyric to a popular Peter Tosh song.

• There was also the infamous slogan from The Fabulous Furry Freak Brothers cartoon: Dope will get you through times of no money better than money will get you through times of no dope.

However, the general thrust of the abolitionist arguments tended to minimize the potential economic and social costs.

Mixed messaging
This dominance of the unrestrained arguments and counterarguments related to marijuana legalization often proved to be confusing to policymakers – and to he general public.

“The strong claims made by both advocates and critics are substantially overstated and, in some cases, entirely without real‐world support,” according to a 2021 Cato Institute drug policy analysis, which summed up the opposing contentions.

In the past decadeo,many of  the arguments and discourse have become better informed, relevant and nuanced.

Advocates have suggested that legalization reduces crime, raises tax revenue, lowers criminal justice expenditures, improves public health, and stimulates the economy.

Further, advocacy has focused primarily on the human cost of marijuana prohibition, such as the lives of people that were ruined because of draconian penalties and lengthy prison sentences for simple marijuana offenses. [One egregious example is Patricia Spottedcrow, a 25-year-old mother in Oklahoma, who received a 12-year sentence in 2011 for selling two baggies of pot, worth $31, to a police informant.]

• “Marijuana legalization has always been a racial justice issue,” according to a 2019 Human Rights Watch report.

• A Black person is 3.64 times more likely to be arrested for marijuana possession than a white person, even though Black and white people use marijuana at similar rates, according to a 2018 ACLU report.

• In 2018 in Rhode Island, Black people were 3.3 times more likely than white people to be arrested for marijuana possession. That ratio ranked us 30th in the nation for marijuana arrest racial disparities.

In turn, the marijuana prohibitionists have argued that legalization spurs marijuana and other drug or alcohol use, increases crime, diminishes traffic safety, harms public health, and lowers teen educational achievement – linking marijuana use and impairments in learning, memory and attention.

• Data from a 2014 National Bureau of Economic Research showed a national increase in probability of use, in frequency of use, and an increase in Marijuana Use Disorder diagnoses after medical legalization.

• Nora Volkow, the current director of the National Institute on Drug Abuse, said: “The greatest mortality comes from legal drugs. The moment you make a drug legal, you’re going to increase the number of people who get exposed to it, and therefore you increase the negative consequences from its use.”

Volkow continued: “When you legalize, you create an industry whose purpose is to make money selling those drugs. And how do you sell it? Mostly by enticing people to take them and enticing them to take high quantities.”

• According to the Centers for Disease Control and Prevention, more than 95,000 deaths/year attributed to excessive alcohol use, and 480,000 to cigarette smoking.

“The fact that legalization might generate a fiscal dividend does not, by itself, make it a better policy than prohibition,” according to a caveat in a 2010 CATO Institute report on the budgetary impact of ending drug prohibition.

What arguments swayed policy makers and legislative leaders? Was it that un-just criminal punishment and racial disparities outweighed health considerations and increased public health costs?

The biggest arguments today are about what kind of business model to use for legalization. Former Gov. Raimondo favored a state-controlled business model. Senate President Ruggiero supports a commercial approach, and so does Gov. McKee.

Why legalization now?
There are numerous factors driving the push for marijuana legalization. They include: We are experiencing the convergence of our existing fractured economic situation, competitive legalization in Massachusetts, little fallout has occurred from our 2006 legalization of medical marijuana, the sharp decline in Twin River gambling revenue since the opening of Encore Boston Harbor, and, of course, the COVID-19 pandemic.

The perceived benefits from any drug policy change are the expected combination of increased revenue and reduced expenditures. Those gains would come from two primary sources: increases in tax revenue and decreases in drug enforcement spending.

When it comes to increased revenue and anticipated fiscal benefits, the national picture is revealing.

• “Marijuana sales have jumped substantially over the past year in parts of the country where recreational pot is legal, giving a boost to states that have come to depend on tax revenue to bolster their pandemic-battered coffers,”  The Hill reported in February.

Further, The Hill story continued: “The majority of states that allow recreational marijuana reported either record sales or record-high tax collections in the past 12 months, signs of both a maturing industry that is attracting new customers and consumers who had little else to do during coronavirus lockdowns.”

• National sales of all cannabis products rose 67 percent in 2020, according to Flowhub, a cannabis retail management platform.

• More locally, Massachusetts has seen total sales of $1.24 billion between November of 2018 through March of 2021, in the first two and half years of marijuana legalization.

• Rhode Island is traditionally in the top 10 nationally in marijuana use. Approximately 23.3 percent of Rhode Island adults used cannabis in 2018-2019, ranking us 9th in the nation, according to Statista,

• The 2019 population of Rhode Island was 1.06 million. Twenty-three percent of that figure is a potentially robust market, with room for growth.

Under the R.I. Senate’s plan, the proposed law would legalize the possession of up to one ounce of marijuana by individuals over the age of 21. It also allows for home grow comparable to neighboring Massachusetts. Cannabis consumption would be prohibited in public places, and unsealed containers would be prohibited from the passenger areas of a car.

In terms of taxation, a cannabis sales tax of 10 percent would apply, in addition to the 3 percent local sales tax and the state’s 7 percent sales tax. Licensing fees range from as low as $100 for a small cultivator’s license, $5,000 for manufacturers and testing entities’ licenses, and up to $20,000 for the largest cultivators and retailers.

Once enacted, the newly created, five-member Cannabis Control Commission would be empowered to establish rules and regulations for the state’s cannabis market and tasked to vet applicants. Retail licenses would be capped at one license per 10,000 residents per municipality, but every community would be eligible for at least three retail licenses.

The anticipated economic benefits extend beyond the expanding industry of cannabis researchers and developers, nurseries and dispensaries. There are potential opportunities for secondary industries such as software developers, construction companies, and financing services. Cannabis-related investments have already become a part of some investment portfolios.

In addition, there are the prospects of reduced expenditures in the elimination of some drug arrests, prosecutions and drug incarcerations. Rhode Island costs in 2016 related to marijuana were $76.1 million, according to the study on State and Local Expenditures Attributable to Drug Prohibition conducted by the CATO Institute. Rhode Island’s total cost attributable to all drugs was $203.6 million, according to the study. In FY 2020, the R.I. Department of Corrections received $267 million, according to an ABC6 report.

Gov. McKee’s proposed FY 2022 budget estimates legalized marijuana will only generate $1.7 million in net revenue to the state in its first year, due to what the budget office calls “substantial startup costs.” In later years, the annual revenue is expected to generate $17 million.

While legalization can produce ample tax revenue, it can also impose major costs. These include, but are not limited to, the expense of statewide regulation; treatment for marijuana use disorders; training for the police on dealing with marijuana-impaired driving; and public education about marijuana, including campaigns to prevent adolescent use.

An unknown is the effect on the black market. Prohibition imposes a black-market risk premium that is added to the cost of providing marijuana. With legalization this risk premium will no longer exist, or will be minimized. If the taxes are too high, or the black market is too strong, or the bureaucratic red tape is too onerous, then projections could miss their mark by millions.

A clear strategy direction?
If the industry growth rate continues, the potential benefits to the national economy will become more difficult for Congress to ignore. If marijuana becomes legal on the national level, investors will really be able to capitalize. The ability of marijuana companies to list their stocks on the U.S. exchanges would enhance liquidity and open access to many more investors.

Although policymakers are presently focused on marijuana, the majority of budgetary gains would likely come from legalizing heroin and cocaine, according to some observers.

The question is: Is the all-drugs legalization train now idling its engines waiting for the track to clear from the marijuana legalization express?

Ian Knowles is program director at RICARES and a frequent contributor to ConvergenceRI.


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